ANNUAL REPORT
December 31, 1995
The REvest
Growth & Income Fund
A No-Load Mutual Fund
An Investment In Small and
Medium-Sized Company Equities
A Series of The Royce Fund
<PAGE>
Profile of the Fund
The REvest Growth & Income Fund ("REvest" or the "Fund"), is a
series of The Royce Fund, a Massachusetts business trust
registered with the Securities and Exchange Commission as an open-
end, diversified management investment company. The objective of
the Fund is primarily long-term capital growth and secondarily
current income.
Thomas R. Ebright, President of Royce, Ebright & Associates, Inc.
(RE&A), a registered investment adviser, is responsible for the
management of the Fund's portfolio, subject to the authority of The
Royce Fund's Trustees.
OUR STRATEGY FOR WEALTH BUILDING
The foundation of our strategy is the use of small and mid-sized
companies with growth prospects that are owned in a carefully
controlled pool of capital deemed practical to manage. This combined
with our value orientation allows us to buy what we think are "great
companies" at "great prices". The Fund is best used as part of a
well-planned and diversified team of long-term investments.
GREAT COMPANIES
Defined as having above average returns on assets & equity, lower
than average leverage plus growth prospects.
GREAT PRICES
Defined as having a perceived valuation discrepency between
business value and market price at the time of purchase.
[Triangular graphic of the reverse of six dollar coins]
SMALL & MID-CAP STOCKS
These securities have, we believe, more potential for growth, have
historically generated higher returns for investors, and are
generally less well-known and more likely to be improperly priced.
CONTROLLED SIZE OF FUND
Designed to allow the Fund to maintain a constant character over
its lifetime. The Fund will automatically close to new investors
when its assets reach $350 million to make it more practical for
the adviser to actively manage the Fund's portfolio.
A MIX OF GROWTH & VALUE
We look for companies that have growth prospects that will allow
them to increase their long-term business value. We combine a
value-oriented selection approach with this expectation of business
growth to select our portfolio.
<PAGE>
Manager's Letter (picture of Tom Ebright included on this page)
Dear Friends:
1995 will be remembered as the year that large-cap and technology
stocks ruled the roost. Any approach to stock picking that under-
weighted these two types of securities during 1995 ended up falling
behind in the performance race. REvest, with its well defined small
and medium-sized company value niche, was out-of-sync and out of
the race from the very beginning of the year. REvest's 16.2% total
return for the calendar year trailed both the S&P 500 (up 37.5%),
and the Russell 2000 (up 28.4%).
Obviously, being a permanent under-achiever is not our goal. Both
a value approach and the use of secondary securities simultaneously
in a portfolio have historically caused performance patterns
significantly different than the popular mainline averages, such as
the S&P 500 and Russell 2000. These differences are built into our
Fund by design and therefore it should not be surprising that they
produce different results in any given year. As you know, these
differences can work both for and against us, with 1995 definitely
in the "against" category.
In the meantime, we've continued to build and work on a portfolio
that is consistent with our stated approach. The portfolio now
consists of 63 companies spread over nine industry groupings. We
personally visited about 50% of our companies this year in addition
to the continuous analytical work on the growth, value, quality and
income characteristics of all of our companies. In this process we
both added and subtracted some companies in an effort to upgrade
the overall prospects for the portfolio.
The Fund has continued to grow, closing the year at $35.8 million
in total net assets. This growth, along with careful expense
control, has further lowered the Fund's 1995 expense ratio to 1.30%
(from 1.36% annualized at 6/30/95). We believe that our willingness
to "stay the course" and "play our position" in a disciplined and
consistent manner is the key reason why investors have continued to
invest, enabling the Fund to grow.
On a more personal note, RE&A moved into new offices in Portland,
Maine at year-end. This new facility is both modern and large
enough to accommodate the Fund's expected growth. In addition,
Andrew Wigzell, who served the Fund so well during its first year,
has returned to school. Taking his place as RE&A's customer
service rep is Mike McNamara, a recent graduate of Fairfield
University. Pictures of the new office and Mike appear later in
this report.
Being out-of-sync in 1995 has permitted the assembly of what we
believe is an under-valued and under-appreciated pool of assets. We
further believe that this portfolio will prove its mettle if and
when the market turns its attention to a different breed of
securities from the hi-tech mania that was so popular last year.
Your continued confidence, patience and ownership of REvest is much
appreciated.
Sincerely,
Thomas R. Ebright
Portfolio Manager
President, Royce, Ebright & Associates, Inc.
<PAGE>
Portfolio Summary
The following information is provided as a "bird's eye" view of The
REvest portfolio as of December 31, 1995. For a more complete
picture, the full portfolio and accompanying financial statements
should be read in their entirety.
Portfolio Composition Value % of Net Assets
_________________________________________________________________
Common Stocks $33,883,663 94.6%
Convertible Bond 780,000 2.2%
Cash & Other Net Assets 1,140,218 3.2%
________ _____
Total Net Assets $35,803,881 100.0%
Industry Concentration % of Net Assets
_________________________________________________________________
Financial 15.2%
Technology 12.3
Industrial Cyclicals 12.3
Consumer Products 11.3
Energy 10.2
Health 10.1
Real Estate 8.6
Services 8.5
Retail 8.3
Cash 3.2
Average Financial Characteristics of Portfolio Companies
(Unaudited)
_________________________________________________________________
Market Capitalization $537 Million
P/E Ratio 15.5x
P/B Ratio 1.8x
Return on Assets 7.4%
Return on Equity 13.7%
Compound 5-Year Growth Rate 13.5%
Gross Portfolio Yield 3.1%
Top Twenty Positions Market Value % of Net Assets
_________________________________________________________________
1. Barrett Resources $1,011,675 2.8%
2. W.R. Berkley Corp. 964,813 2.7
3. Peoples Heritage Financial Group, Inc. 903,175 2.5
4. Cousins Properties Incorporated 901,125 2.5
5. Exabyte Corporation 870,188 2.4
6. Greif Bros. Corporation 860,000 2.4
7. La-Z-Boy Chair Company 824,363 2.3
8. Protective Life Corporation 812,500 2.3
9. Diebold, Incorporated 802,938 2.2
10. Crompton & Knowles Corporation 801,625 2.2
11. Arnold Industries, Inc. 799,250 2.2
12. New Plan Realty Trust 796,250 2.2
13. Storage Technology Corp. 780,000 2.2
8% Conv. Sub. Deb. due 5/31/15
14. National Presto Industries, Inc. 755,250 2.1
15. C-Tec Corporation 744,000 2.1
16. Haemonetics Corporation 727,750 2.0
17. Allied Healthcare Products, Inc. 720,000 2.0
18. Pyxis Corporation 702,000 2.0
19. Zero Corporation 678,050 1.9
20. Teleflex Incorporated 676,500 1.9
<PAGE>
Management Discussion of Performance
Large capitalization stocks, growth stocks and especially
technology stocks of all capitalization sizes dominated 1995's
stock market. With large-cap and growth stocks leading the way,
value-oriented small and medium-capitalization stocks of the type
owned by REvest failed to keep up with the leaders, posting
positive but clearly trailing returns. REvest gained 57% of the
small-cap Russell 2000's total return (16.2% versus 28.4%) and 43%
of the S&P's total return (16.2% versus 37.5%). Since the REvest
portfolio is different by design (constructed with small and
medium-sized company stocks that are bought using a value approach
as compared to portfolios using either larger-capitalization stocks
or which use primarily a growth approach to selection), management
expects it to be often out-of-sync with the general equity market.
Management believes that its approach, which emphasizes buying what
it believes are "great companies" at "great prices" will generate
long-term quality total returns, even if these returns are
delivered in a manner that is different from the general market.
Management believes these returns will be generated from the Fund's
participation in the growth and development of its portfolio
companies and the positive resolution of the value discrepancies
that management believes were in place at the time of purchase.
This investment approach, which emphasizes moderate growth, a
strong interest in business value and non-mainstream securities,
will require patience and long-term ownership in order to realize
the return benefits of owning the Fund.
Comparison of Change in Value of a $10,000 Initial Investment
on 8/1/94* in The REvest Growth & Income Fund, the S&P 500 and the
Russell 2000
(there is a growth chart (line graph) included for 1994 and 1995)
Year Period
Ended Ended
12/31/95 12/31/94*
REvest total return 16.2% -2.9%
S&P 500 total return 37.5% 1.6%
Russell 2000 total return 28.4% 3.3%
The above table depicts the historical returns of REvest, the
unmanaged S&P 500, as representative of large-company stocks, and
the unmanaged Russell 2000, as representative of small-company
stocks. The Fund's present investment philosophy was followed in
each of the periods identified. All results presented in this
Report are on a "total return" basis, which assumes that all
dividends and distributions were reinvested. No redemption fees are
included because they apply only to accounts open for less than one
year.
The results presented in this Report represent past performance and
should not be considered representative of the "total return" from
an investment in the Fund today. They are provided only to give an
historical perspective of the Fund. The investment return and
principal value of the Fund's shares will fluctuate so that the
shares may be worth more or less than their original cost when
redeemed.
*Commencement of Operations - August 1, 1994
<PAGE>
Schedule of Investments (at 12/31/95)
Common Stocks and Bonds- 96.8% Value
Shares or Principal Value Cost (Note 1)
CONSUMER PRODUCTS - 11.3%
10,000 * First Team Sports, Inc. $107,633 $152,493
26,700 La-Z-Boy Chair Company 814,835 824,363
19,000 National Presto Industries, Inc. 804,108 755,250
28,800 Oxford Industries, Inc. 544,966 482,400
24,500 The Rival Company 452,663 542,063
46,000 Russ Berrie and Company, Inc. 627,933 580,750
45,000 The Stride Rite Corporation 591,663 337,500
4,300 WD-40 Company 171,615 176,300
25,000 * Wholesome & Hearty Foods, Inc. 295,557 190,625
4,410,973 4,041,744
ENERGY - 10.2%
34,440 * Barrett Resources Corporation 681,279 1,011,675
10,000 Berry Petroleum Company Class A 103,226 101,250
37,500 * Box Energy Corporation Class B 368,250 323,438
20,500 Equitable Resources, Inc. 601,023 640,625
16,000 Helmerich & Payne, Inc. 446,170 476,000
34,000 KCS Energy, Inc. 555,568 510,000
18,000 Penn Virginia Corporation 601,537 580,500
3,357,053 3,643,488
FINANCIAL - 15.2%
17,950 W.R. Berkley Corp. 665,799 964,813
17,025 Keystone Financial, Inc. 491,103 510,750
17,566 Keystone Heritage Group, Inc. 460,229 535,763
21,700 Mercantile Bankshares Corporation 450,102 604,888
39,700 Peoples Heritage Financial Group, Inc. 552,114 903,175
26,000 Protective Life Corporation 603,137 812,500
21,425 Susquehanna Bancshares, Inc. 501,661 567,763
20,200 Washington National Corporation 414,089 558,025
4,138,234 5,457,677
HEALTH - 10.1%
45,000 Allied Healthcare Products, Inc. 763,455 720,000
41,000 * Haemonetics Corporation 675,870 727,750
26,000 * MedCath Incorporated 331,745 546,000
48,000 * Pyxis Corporation 786,818 702,000
22,000 * Respironics, Inc. 318,726 462,000
25,000 * Tecnol Medical Products, Inc. 446,981 450,000
3,323,595 3,607,750
INDUSTRIAL CYCLICALS - 12.3%
7,000 Chesapeake Corporation 201,540 207,375
24,700 CLARCOR Inc. 495,817 503,263
60,500 Crompton & Knowles Corporation 873,710 801,625
32,000 Greif Bros. Corporation Class A 761,125 860,000
13,000 Juno Lighting, Inc. 206,863 208,000
15,000 Kimball International, Inc. Class B 355,478 378,750
31,400 Matthews International Corporation Class A
596,336 612,300
7,000 Watts Industries, Inc. Class A 150,990 162,750
38,200 Zero Corporation 503,549 678,050
4,145,408 4,412,113
The accompanying notes are an integral part of the financial
statements.
<PAGE>
Value
Shares or Principal Value Cost (Note 1)
REAL ESTATE - 8.6%
44,500 Cousins Properties Incorporated $754,839 $901,125
36,300 Manufactured Home Communities, Inc. 668,404 635,250
36,400 New Plan Realty Trust 748,111 796,250
19,000 Pennsylvania Real Estate Investment Trust
399,179 394,250
25,500 The Ryland Group, Inc. 380,535 357,000
2,951,068 3,083,875
RETAIL - 8.3%
19,500 Blair Corporation 759,465 616,688
29,500 Claire's Stores, Inc. 322,583 519,938
33,000 Cracker Barrel Old Country Store, Inc. 710,682 569,250
64,500 * The Dress Barn, Inc. 630,422 636,938
15,000 Hannaford Bros. Co. 396,863 369,375
60,000 Sun Television and Appliances, Inc. 486,169 247,500
3,306,184 2,959,689
SERVICES - 8.5%
46,000 Arnold Industries, Inc. 804,312 799,250
5,000 Chemed Corporation 190,500 194,375
15,000 Gilbert Associates, Inc. Class A 224,900 187,500
12,600 Kansas City Southern Industries, Inc. 462,497 576,450
35,000 * Lucor, Inc. Class A 179,375 247,188
9,600 PHH Corporation 351,422 448,800
29,100 The Standard Register Company 542,826 585,638
2,755,832 3,039,201
TECHNOLOGY - 12.3%
24,000 * C-TEC Corporation 601,054 744,000
14,500 Diebold, Incorporated 524,462 802,938
59,500 * Exabyte Corporation 847,794 870,188
22,000 National Data Corporation 450,603 544,500
$800,000 Storage Technology Corporation 750,250 780,000
8% Conv. Sub. Deb. due 5/31/15
16,500 Teleflex Incorporated 609,205 676,500
3,783,368 4,418,126
TOTAL COMMON STOCKS AND CORPORATE BOND 32,171,715 34,663,663
U.S. TREASURY OBLIGATION - 2.8%
$1,000,000
U.S. Treasury Notes 6.75% due 2/28/97 982,969 1,017,030
REPURCHASE AGREEMENT - .4%
State Street Bank and Trust Company, 5.25% due 1/2/96,
collateralized by U.S. Treasury Notes, 7.25%, due 5/15/96,
valued at $149,177 143,000 143,000
TOTAL INVESTMENTS - 100.0% 33,297,684 35,823,693
LIABILITIES LESS CASH AND OTHER ASSETS (19,812)
TOTAL NET ASSETS - 100.0% $35,803,881
*Non-income producing.
Income Tax Information - The cost for federal income tax purposes
was $33,274,375. At December 31, 1995, net unrealized appreciation
for all securities amounted to $2,549,318, consisting of aggregate
gross unrealized appreciation of $4,017,997 and aggregate gross
unrealized depreciation of $1,468,679.
The accompanying notes are an integral part of the financial
statements.
<PAGE>
Statement of Assets and Liabilities (at 12/31/95)
ASSETS:
Investment at value (identified cost $33,297,684) (Note 1) $35,823,693
Receivable for dividends and interest 87,422
Prepaid expenses and other assets 2,259
__________
TOTAL ASSETS 35,913,374
__________
LIABILITIES:
Dividend payable 54,020
Investment advisory fee payable (Note 2) 30,296
Accrued expenses 25,177
__________
TOTAL LIABILITIES 109,493
__________
NET ASSETS $35,803,881
__________
__________
ANALYSIS OF NET ASSETS:
Distribution in excess of net investment income ($6,056)
Accumulated net realized gains on investments 6,586
Net unrealized appreciation on investments 2,526,009
Shares of beneficial interest (Note 3) 3,336
Additional paid-in capital 33,274,006
__________
NET ASSETS $35,803,881
__________
__________
PRICING OF SHARES:
Net asset value, offering and redemption price per share
($35,803,881 / 3,335,475 shares outstanding) (Note 3) $10.73
_____
_____
Statement of Changes in Net Assets
Period ended
Year Ended December 31, 1994
December 31, 1995 (Note 1)
Net investment income $ 550,063 $ 80,390
Net realized gain (loss) on investments 1,063,263 (32,788)
Net unrealized appreciation (depreciation) on investments
3,079,868 (553,859)
__________ __________
Increase (decrease) in net assets resulting from operations
4,693,194 (506,257)
Dividends paid from net investment income (525,810) (107,626)
Distributions paid from net realized gains (1,034,263) -
From Capital Share Transactions:
Increase in net assets from capital share transactions (Note 3)
10,994,420 22,270,223
__________ __________
Increase in net assets 14,127,541 21,656,340
Net Assets:
Beginning of period (Note 1) 21,676,340 20,000
__________ __________
End of period (including distributions in excess of
net investment income of $6,056 and $27,236, respectively)
$35,803,881 $21,676,340
__________ __________
__________ __________
The accompanying notes are an integral part of the financial
statements.
<PAGE>
Statement of Operations (at 12/31/95)
INVESTMENT INCOME:
Income:
Dividends $ 807,850
Interest 153,573
________
Total Income 961,423
________
Expenses:
Investment advisory fee (Note 2) 320,761
Custodian and transfer agent fees 36,897
Auditing and legal fees 15,502
Administrative and clerical services 13,516
Federal and state registration fees 10,734
Miscellaneous 11,047
Trustees' fees 2,903
__________
Total Expenses 411,360
__________
Net Investment Income 550,063
__________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Net realized gain on investments 1,063,263
Net unrealized appreciation on investments 3,079,868
__________
Net realized and unrealized gain on investments 4,143,131
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$4,693,194
__________
__________
The accompanying notes are an integral part of the financial
statements.
Financial Highlights
This table is presented to show selected data for a share
outstanding throughout each period and to assist shareholders in
evaluating the Fund's performance. Period ended
Year ended December 31, 1994
December 31, 1995 (Note 1)
_______________ _______________
Net Asset Value, Beginning of Period $9.66 $10.00
Income From Investment Operations:
Net Investment Income (a) 0.18 0.04
Net Gains or Losses on Investments
(both realized and unrealized) 1.38 (0.33)
________ ________
Total From Investment Operations 1.56 (0.29)
________ ________
Less Distributions:
Dividends (from net investment income) (0.17) (0.05)
Distributions (from net capital gains) (0.32) -
________ ________
Total Distributions (0.49) (0.05)
________ ________
Net Asset Value, End of Period $10.73 $9.66
________ ________
________ ________
Total Return 16.2% -2.9%
Ratios/Supplemental Data:
Net Assets, End of Period $35,803,881 $21,676,340
Ratio of Expenses to Average Net Assets (b) 1.30% 1.42%*
Ratio of Net Investment Income to Average Net Assets (c)
1.73% 1.45%*
Portfolio Turnover Rate 53% 5%
* Annualized.
(a) Net investment income is shown after waiver of fees by the
adviser. The per share effect of this waiver is $0.01 for the
period ended December 31, 1994.
(b) The ratio of expenses to average net assets before waiver of
fees by the investment adviser would have been 1.78% for the period
ended December 31, 1994.
(c) The ratio of net investment income to average net assets before
waiver of fees by the investment adviser would have been 1.09% for
the period ended December 31, 1994.
The accompanying notes are an integral part of the financial
statements.
<PAGE>
Notes To Financial Statements
1. Summary of Significant Accounting Policies:
The REvest Growth & Income Fund (the "Fund") is a series of The
Royce Fund (the "Trust"), a diversified open-end management
investment company established as a business trust under the laws
of Massachusetts. On July 29, 1994, the Fund issued 2,000 shares of
beneficial interest for $20,000 to effect the Fund's initial
capitalization. The Fund commenced operations on August 1, 1994.
The preparation of financial statements in conformity with
generally accepted accounting principles required management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
a. Valuation of investments:
Securities listed on an exchange or on the Nasdaq National Market
System are valued on the basis of the last reported sale prior to
the time the valuation is made or, if no sale is reported for such
day, at their bid price for exchange-listed securities and at the
average of their bid and asked prices for Nasdaq securities.
Quotations are taken from the market where the security is
primarily traded. Other over-the-counter securities for which
market quotations are readily available are valued at their bid
price. Securities for which market quotations are not readily
available are valued at their fair value under procedures
established and supervised by the Board of Trustees. Bonds and
other fixed income securities may be valued by reference to other
securities with comparable ratings, interest rates and maturities,
using established independent pricing services.
b. Investment transactions and related investment income:
Investment transactions are accounted for on the trade date and
dividend income is recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. Realized gains and losses
from investment transactions and unrealized appreciation and
depreciation of investments are determined on the basis of
identified cost for book and tax purposes.
c. Taxes:
As a qualified regulated investment company under Subchapter M of
the Internal Revenue Code, the Fund is not subject to income taxes
to the extent that it distributes substantially all of its taxable
income for its fiscal year. The schedule of investments includes
information regarding income taxes under the caption "Income Tax
Information".
d. Distributions:
The Fund declares dividends on a quarterly basis and capital gains
distributions annually. These dividends and distributions are
recorded on the ex-date and are determined in accordance with
income tax regulations which may differ from generally accepted
accounting principles. Permanent book and tax basis differences
relating to shareholder distributions will result in
reclassifications to paid-in capital and may affect net investment
income per share. Undistributed net investment income may include
temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
e. Repurchase agreements:
The Fund enters into repurchase agreements with respect to its
portfolio securities solely with State Street Bank and Trust
Company ("SSB&T"), the custodian of its assets. The Fund restricts
repurchase agreements to maturities of no more than seven days.
Securities pledged as collateral for repurchase agreements are held
by SSB&T until maturity of the repurchase agreements. Repurchase
agreements could involve certain risks in the event of default or
insolvency of SSB&T, including possible delays or restrictions upon
the ability of the Fund to dispose of the underlying securities.
2. Investment Adviser:
Under the Trust's investment advisory agreement with Royce, Ebright
& Associates, Inc. ("RE&A"), the Fund paid RE&A fees totaling
$320,761 for the year ended December 31, 1995. The agreement
provides for fees equal to 1.0% per annum of the Fund's average net
assets. Such fees are computed daily and are payable monthly to
RE&A.
3. Fund Shares:
The Board of Trustees has authority to issue an unlimited number of
shares of beneficial interest of the Fund, with a par value of
$.001. Share transactions were as follows:
For the year Period ended
ended December 31. 1994
December 31, 1995 (Note 1)
________________ ________________
Shares Amount Shares Amount
Sold 1,147,378 $11,532,815 2,244,020 $22,301,090
Issued as reinvested
dividends and
distributions 149,814 1,588,717 - -
Redeemed (204,573) (2,127,112) (3,164) (30,867)
Shares redeemed within one year of purchase are subject to a 1%
redemption fee.
4. Purchases and Sales of Securities:
For the year ended December 31, 1995, the cost of purchases and the
proceeds from sales of investment securities, other than short-term
securities, amounted to $27,475,270 and $16,539,702, respectively.
<PAGE>
Report of Independent Accountants
To the Board of Trustees of The Royce Fund and Shareholders of The
REvest Growth & Income Fund:
We have audited the accompanying statement of assets and
liabilities of The REvest Growth & Income Fund, including the
schedule of investments as of December 31, 1995, the related
statement of operations for the year then ended, the statement of
changes in net assets and the financial highlights for the year
ended December 31, 1995 and for the period from August 1, 1994
(commencement of operations) to December 31, 1994. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of The REvest Growth & Income Fund
as of December 31, 1995, the results of its operations for the year
then ended and the changes in its net assets and the financial
highlights for the year ended December 31, 1995 and for the period
fromAugust 1, 1994 (commencement of operations) to December 31,
1994 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 7, 1996.
Customer Service
(THERE IS A PHOTO OF MICHAEL MCNAMARA ON THIS PAGE)
1. If I have questions or need literature about the Fund who may
I call?
Call Michael McNamara, RE&A's customer service officer, at
800-277-5573. The RE&A office is open from 9:00am to 5:30pm
(Eastern Time) every business day.
2. If I have questions about the Fund's investments who should I
call?
Call Tom Ebright, the portfolio manager, at 800-277-5573.
We're one of a small number of funds where the manager is available
to talk directly to investors. If Tom's traveling he'll return your
call when he returns to the office. We try to treat our investors
as true partners, with us, in the Fund.
3. How often does the Fund mail out statements?
Cumulative year-to-date statements are mailed out after each
transaction and after each dividend. Tax information is mailed by
January 31st of each year. The Fund distributes formal Semi-Annual
and Annual Reports which are mailed to each shareholder in August
and February.
4. Does the Fund maintain a mailing list for the benefit of its
"street name" shareholders
Yes, if your shares are held in a brokerage account and you
would like to receive your mailings directly from the Fund call
Michael McNamara in RE&A's office and we will add your name to the
Fund's mailing list. This will get Fund material to you much faster
and allow us to contact you directly by mail.
5. Is it correct that there are no sales charges or 12b-1 fees?
Yes, not one penny of your investment goes to any sales charge
or 12b-1 fee. The Fund is one of the so-called "pure" no-load
Funds. You will rarely, if ever, see the Fund advertised to
investors. We believe that the Fund should sell itself because it
does a good job for its investors.
6. Is the Fund available for IRA investments and other retirement
plans?
Yes, the Fund offers both IRA and 403(b)(7) plans to its
investors. Because of the Fund's philosophy and long-term approach
to investing, we believe that it may be an appropriate vehicle for
all types of retirement plans.
7. When does the Fund pay income & capital gain distributions?
The Fund makes quarterly income distributions and an annual
capital gain distribution at the end of December. A preliminary,
non-binding estimate of the amount of the year-end distributions is
available to shareholders by calling the RE&A office any time after
the Thanksgiving holiday. Distributions are automatically
reinvested unless we receive other instructions from the
shareholder.
8. Why does the Fund impose a 1% redemption fee during the first
year of ownership?
This fee is charged to discourage short-term trading in the
Fund's shares. When short-term investors trade in and out of a
mutual fund, they increase the costs of operations for the
permanent shareholders. This activity can also disrupt the
investment plan for the portfolio and reduce overall returns. When
charged, the 1% fee recovers the costs of this disruption for the
rest of the shareholders.
<PAGE>
(back cover)
(there are 3 photos of the new offices located here also)
Pictured on this page are the new offices of the adviser to the
Fund, Royce, Ebright & Associates, Inc., located on the top floor
of the 50 Portland Pier building in Portland, Maine. The office has
over 4,000 square feet of usable space and should allow for all the
expected business growth of the adviser. The space was bought by
the adviser fully furnished and the office has been fully
operational since February 1st.
This report must be accompanied or preceded by a current Prospectus
of the Fund.
Royce, Ebright & Associates, Inc.
Investment Adviser
50 Portland Pier
Portland, ME 04101-4721
(207) 774-7455 - (800) 277-5573
Fax (207) 772-7370
REvest
Growth & Income Fund
1414 Avenue of the Americas
New York, New York 10019
(800) 221-4268
A Series of The Royce Fund
